USDA GAIN report highlights EU ethanol, biodiesel markets

A report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network provides an overview of the European Union’s liquid biofuel industry, including information related to ethanol and biodiesel.

According to the report, the European Parliament approved a reform of the Renewable Energy Directive in April, which places a 7 percent cap on crop-based biofuels use in the transportation sector. The European Council is expected to confirm the parliament’s vote this year. If approved, member states would be required to enact the new legislation by 2017.

The report notes that the use of ethanol and biodiesel was reduced in 2012 and 2013, but stabilized last year, and is expected to remain at near current levels for the remainder of 2015 and 2016. The report attributes stagnation in the EU biofuel sector to lower fossil fuel use, adjustment of member state mandates, and double-counting of biofuels made from non-food feedstock. Although consumption of biofuels was decreased in recent years, protective trade measures and low feedstock prices allowed European production to increase, nearly reaching self-sufficiency last year. The report indicates the EU produced approximately 99 percent of the ethanol it consumed last year, along with 97 percent of the biodiesel.

According to the GAIN report, ethanol was blended at rates of approximately 3.5 percent last year, with biodiesel blends at 5.3 percent. Additional consumption of biofuels in the EU will depend primarily on the successful introduction of higher-level blends, such as E10 and E85.

Regarding the production of non-food-based biofuels, the report notes that the blending rate of non-food-based ethanol is approximately 0.2 percent, with the blending of non-food-based biodiesel at 0.7 percent. While the production of biodiesel from non-food feedstocks, such as waste an animal fats, has taken off in recent years, the report states cellulosic ethanol has lagged behind.

According to data included in the report, the EU produced 5.25 billion liters (1.39 billion gallons) of fuel ethanol last year. That production level is expected to be maintained this year and next year. Of that volume, 75 million liters was cellulosic ethanol. The European Union had 71 ethanol refineries last year, with a combined capacity of 8.48 billion liters. Capacity is expected to be maintained at current levels through 2016. Capacity use was 62 percent last year. That level is also expected to be maintained this year and next year. The ethanol blend rate was 3.5 percent last year, and is expected to increase to 3.6 percent this year and 3.8 percent in 2016.

The EU imported approximately 367 million liters of fuel ethanol last year, with that volume expected to drop to 270 million liters this year and next year. European exports of fuel ethanol reached 228 million liters last year, and are expected to increase to 250 million liters this year, falling to 230 million liters next year.

The report also addresses ethanol coproduct production, noting that 3.23 million metric tons of distillers dried grains were produced last year. That number is expected to fall to 3.17 million metric tons this year, increasing to 3.19 million metric tons in 2016. Corn oil production, however, is expected to increase from 155 metric tons in 2014 to 157 metric tons this year and 159 metric tons next year.

Sugar beet was the primary ethanol feedstock last year, with 11.51 million metric tons going to ethanol production, followed by corn with 5.36 million metric tons, wheat at 3.54 million metric tons, rye at 769,000 metric tons and barley at 602,000 metric tons. This year, 12.21 million metric tons of sugar beet is expected to be used as ethanol feedstock, along with 5.4 million metric tons of corn, 3.32 million metric tons of wheat, 829,000 metric tons of rye, and 602,000 metric tons of barley. Moving into 2016, sugar beet use is expected to be 12.02 million metric tons, with corn at 5.48 million metric tons, wheat at 3.26 million metric tons, rye at 846,000 metric tons and barley at 598,000 metric tons.

France was the top ethanol producing member state last year, with 1.18 billion liters of production, followed by the Benelux region, Germany, the U.K. and Hungary. Germany was also the top consumer of ethanol last year, with 1.48 billion liters, followed by the U.K., France, Spain and Italy.

EU biodiesel production reached 12.66 billion liters last year, and is expected to increase to 12.56 billion liters this year and 12.59 billion liters in 2016. Imports are expected to be steady at 650 million liters all three years, with 2014 exports at 181 million liters, falling to 150 million liters in 2015 and 2016.

The EU had 247 biodiesel refineries last year, increasing to 248 this year and next year. Nameplate capacity was 25.17 billion liters last year, increasing to 12.26 billion liters this year and next year. Capacity utilization was 50.3 percent last year, and is expected to fall 49.7 percent this year and increase to 49.9 percent in 2016.

Rapeseed oil is the top biodiesel feedstock in the EU, followed by recycled vegetable oils, palm oil, soybean oil, animal fats, sunflower oil and other feedstocks. Germany is the top biodiesel producing member state, followed by Benelux, France, Spain and Poland.

A full copy of the report, titled “EU Biofuels Annual 2015,” can be downloaded from the USDA FAS GAIN website.